The last few turns of America’s Monopoly game

There is this game we used to play as kids, it was called Monopoly. Perhaps you heard of it? It was a game based ostensibly on the practice of real estate speculation in Atlantic City. The winner is the last person at the end of the game with all the money. Some people assume that the game is about how business works, but the game’s creators meant it as a way to explain how business breaks down, enriching the well-positioned at the expense of anybody else who dares to play.

Do you remember what it’s like to play Monopoly in the last few turns of the game? That’s when the game breaks down, and it is usually a fast collapse scenario. The weaker players find it impossible to make a move toward winning, save for some extraordinary set of lucky rolls. No matter which way they turn, it’s expensive rents and little opportunity for ownership. In the latter 10% of the game, the winner emerges quickly, impoverishes everyone, and declares victory.

Family fun for everyone!

In this spirit, you must read Josh Brown’s treatise entitled “Forget Fairness, Let’s Talk Stupidity,” which tears into our national circumstance at the end of our Monopoly economy. He does an incredible job of re-framing our national dialogue about “income inequality” and “Gini coefficients” in terms of something more than “fairness.”

So no, life’s not fair – we make it on our wits, the connections we forge with others, the skills we learn, the lucky breaks that come our way, the sweat equity we’ve put into our work and the sheer statistical fortuitousness of not being struck down by a drunk driver. Some of us win big, some of us lose huge and the rest of us take what we can from this life just to get by. And it usually works out in the end, even though nothing along the way was ever “fair.”

I like this – the intellectual underpinnings of “paying one’s fair share” are very shaky indeed, not to mention leading down a weird path toward top-down socialism – so I’m all for getting rid of this construct. And Josh puts in a much better frame: impoverishing the Middle Class is stupid.

The fairness aspect is irrelevant – since when in the history of human civilization did wealthy people not make the rules so that their advantages would be assured? It is only when they go to far that there is a reset, a turning point like the beheading of French monarchs and the storming of the Bastille. Episodes like those are the exception, not the rule, which is why they’re so memorable in the first place. 99% of the time, the rich get richer and there is very little turnover in their ranks. Fine.

But the stupidity of having such an obviously unbalanced economy is the more important discussion we should be having right now. The corporations are every bit as vulnerable to the disappearance of the middle class as the middle class is itself.

…offshoring of profits and the export of goods and services won’t sustain these corporations forever. At a certain point, native companies within the developing world will nudge our adventuring multinationals aside (China’s already building its own version of Wall Street). And when that happens, Corporate America is going to turn around and be horrified by the devastation in its own backyard.

“Where did all our customers go?”

Well, you enormous fucking idiots, you fired all your customers. You’ve spent the last decade or so suppressing wage growth in the name of “creating shareholder value” and now even your shareholder base is disappearing.

Wait, what does it mean to fire all your customers? Josh pulls up a very telling chart about wages as a percentage of GDP – which is at an all time low:

What does this mean? It means that there is more money in the economy from financial transactions and investment income than from wages paid to people with a job. Unless your name is Warren Buffett, that means YOU who are not getting paid, a statistic that is borne out by nearly every other statistical model about cost of living, wage increases and inflation. Fact is, most Americans are doing WORSE, having to work harder just to keep from losing ground, than they did in 1980. This chart includes your kid living in your basement after getting a college degree, and it includes those poor bastards working a 32 hour “temporary job” for some corporation, for $8 an hour and no benefits. And it also includes the fact that shareholder value goes UP when corporations can treat human beings like garbage.

Basically, the well-positioned in our society and economy are rapidly arriving at a position where they can name their rents. And people are finding it pretty difficult to find a path to prosperity, save for a series of lucky rolls and/or Chance cards. (You have won American Idol! Collect $325,000 and 12 minutes of notoriety!)

HEY you’re thinking, LOOK, it’s not some corporate executive’s problem that your kid doesn’t have a job! Surely we can look at this and say, HEY, CAPITAL NEEDS RETURNS! It’s nobody’s fault that things happened this way! And yes, that is in fact correct.

It is also stupid. Phenomenally short-sighted and stoopid. Because if you remember the game, it’s over not long after this. And real economies don’t declare a winner – they sometimes break into anarchy and war, and sometimes quietly fizzle. We can’t know which.

We are getting toward the last few turns of the Monopoly game of our current economic structure, in which it is better to “own” things than to actually get up in the morning and do something. In the American mindset, we are very quick to blame the individual and slow to blame the system for being badly designed. That’s probably a good thing on the whole – it’s why there are so many entrepreneurs and hard working folks here in the first place. But there’s that moment in the Monopoly game when every heaves a sigh and thinks, “Why even bother playing the next few turns? We know how this will come out.”

Josh is right – this isn’t about fairness, which everybody over ten years of age should know not to expect. It is however about the successful functioning of a society – and our current trend of valuing ownership over work is not going to continue indefinitely.

So the big US corporations are going to fire their US customers, and replace them with rich Chinese customers. As if the Chinese are going to happily hand over their new wealth to US corporations without asking “Why”?

Oh, I guess we haven’t gotten to that part yet.

http://www.ericgarland.co ericgarland

Yes, and while the elite of the United States doubled down on the “post-national” strategy, China has advanced a tightly-controlled domestic policy of enriching THEMSELVES first. This is also known as “self-preservation.”

http://www.facebook.com/people/Ae-Wehr/1322844727 Ae Wehr

Exactly.

We are essentially right back where we were as a colony, with precious-little of what we consume made domestically.

The US could use a very healthy dose of the Hamiltonian policies which
made the nation independent of England and fueled a rapid rise (via manufacturing) to
superpower status, and damn any international treaties which might get in our way.

We scoffed at international law to get to where we were in the mid-20th century, and we’re going to have to do so again given the handcuffs we’d be under if we adhered to our FTA’s.

monica nixon

Well right and the other thing US corps seem to have forgotten is that the Chinese have the propensity to SAVE unlike their consumption conditioned American counterparts…

mikecoatl

Very good article. Also very disturbing – especially in how the present ‘game’ will end. We can hope that it will “quietly fizzle”, but given America’s propensity for more prurient solutions I fear the “anarchy and war.”

Yogi

Take a deep breath and get this:

When you consider total compensation including salaries, healthcare,
retirement and other non-salary components to compensation, compensation
is equal to 54% of GDP, just as it was in 1947.

The falling wage is an illusion caused by out-of-control healthcare costs….. and pensions…. a problem mostly caused by stupid Government policy, not corporations.

The other article is phenomenally stupid. Henry Ford did not pay higher wages to create new customers for his cars. That is a myth circulated by some punks who read a bunch of Keynesian economics without really getting it. He paid them high wages because he wanted the best workers to join his company and stick around for a long time.

It is the same reason google and facebook pay crazy salaries to 21-year-old freshly minted graduates from Stanford and also give them stock options that could potentially be worth millions if they stick around for a few years.

I hope you don’t believe that these guys are being hired to sit in a room and click on billions of ads !

Steven Perry

When I was borne in 1953 my parents spent a total $32 for 4 prenatal visits and the delivery. They spent another $16 for two days in recovery so total of $48. When my daughter was born in 1990, I paid around $3,500 for two prenatal visits and delivery at a hospital. My wife came home the next day. I also paid around $400 to a midwife. A few months ago we had some friends that had a baby without having insurance they paid close to $10,000 well they are still paying lets say. My Dad’s income in 1953 was around $7,000 annually. His percentage of cost was .06 of his annual wage. If I extrapolate that out that would mean that means I should have been earning around $400,000 in 1990 (I wasn’t) and that our friends would be making close to $1 million dollars, which they don’t. The point is that even when inflation is factored in the “benefits” received today are by comparison paltry to what are real world costs today. The simple fact is that wage earners in 1947 were wealthier where it matters than wage earners today.

Eric Garland: Strategist, author, speaker

My name is Eric Garland. I study major trends for people who have to make big decisions. I am the executive director of Competitive Futures, where I provide strategic and competitive analysis to executives from business and government agencies.